Dive Brief:
- Fluor said Tuesday it lost $171 million, or $1.21 a share, in the fourth quarter of 2021, compared to a loss of $107 million in the year-ago period, as the construction giant reached a $198 million settlement to cover pension costs for retirees in the Netherlands.
- The Texas-based company posted revenue of $3.16 billion, down about 3% from the fourth quarter 2020 as the firm continued to execute on its “Project Fit” restructuring and cost-cutting program, which eliminated $56 million during the year.
- Fluor continues to focus on debt reduction and aligning its business to meet client needs. It gave earnings guidance for 2022 of between $1.15 to $1.40 a share. The number it hits will partly depend on the resolution of protests around the Department of Energy’s nuclear security complex in Tennessee and Pantex plant in Texas. Fluor expects resolution in the third quarter this year.
Dive Insight:
Fluor's backlog fell 18% to around $18.9 billion. That includes around $2.9 billion in backlog for projects in a loss position.
All of its segments reported a decrease in backlog, with its Energy Solutions segment, which focuses on chemicals, fuels and energy, losing around $1.7 billion in backlog to end the year with $9.32 billion.
Urban Solutions, its segment that focuses on mining, metals, life sciences and infrastructure, lost around $2.1 billion in backlog to end the year with $7.05 billion. Mission Solutions decreased its backlog by about $330 million.
Backlog in the Energy Solutions segment decreased during 2021 primarily due to the cancellation of the chemicals project in North America. The Urban Solutions segment decreased due to forecast revisions for procurement and subcontractor cost growth, delays and disruptions in schedule of a legacy infrastructure project. The decline in segment profit was further impacted by schedule delays and productivity on a light rail project.
Takeaways from earnings
Fluor ended the year with $1.2 billion in debt, down from $1.7 billion at the start of 2021. And CFO Joe Brennan said reducing debt continues to be a top priority this year.
The company said it will file an S3 registration Tuesday with the Securities and Exchange Commission, keeping its options open to raise money by selling more common stock.
"We said 2021 was going to be a bridging year, that was clearly the case," CEO David Constable told investors on a conference call Tuesday.
Fluor expects a revenue increase of approximately 10%, with the biggest gains in its Energy Solutions segment, followed by Urban Solutions and Mission Solutions. The guidance assumes increased opportunities across all segments.
Overall, investors were encouraged by Fluor’s prospects for 2022 and the stock opened slightly higher in morning trading on the New York Stock Exchange.
Steep declines in oil prices adversely affected Fluor, according to the report. Fluor reported around a $13 million drop in foreign currency loss.
In December 2021, Fluor announced its modular reactor company NuScale signed a merger agreement with Spring Valley Acquisition Corp. The special purpose acquisition company is acquiring approximately 20% interest in NuScale.
Revenue for the year totaled $12.44 billion versus $14.16 billion. The full-year loss was $206 million compared to a loss of $79 million in 2020.
